Daily Debrief: Web 2.0 casualties?: CNET News Video

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CNET News Video: Daily Debrief: Web 2.0 casualties?

4:30 /
October 10, 2008

Fans of Twitter, Pandora, Skype, Zillow, and seven other Web companies had better hope these start-ups find creative business plans to weather the financial downturn. These 11 Web 2.0 favorites have landed on Webware.com editor Rafe Needleman's list of companies that are potentially in peril. On Friday's edition of the Daily Debrief with CNET's Kara Tsuboi, Rafe explains why these companies are in danger--and what they could be doing to survive.

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>> Welcome to the Daily Debrief. I'm CNET's Kara Tsuboi here with CNET News Webware.com editor Rafe Needleman. And Rafe is, unfortunately, here with some bad news. We're talking about some start-up tech companies that may not survive this financial crisis. And they're not just obscure, random, little bit companies out there. These are some big names.
>> Yeah, I did a story on companies that I really, really like.
>> Yeah.
>> And that are actually are very popular.
>> Sure.
>> But that I'm concerned about.
>> Okay.
>> I'm not gonna say these companies are failing. But the economy has taken a turn in an unfortunate direction, and there are some companies that I really like -- that a lot of people really like, Webware 100 winners -- that are exposed for a variety of reasons.
>> And let's start at the top of your list, and that being Twitter.
>> Yeah.
>> Everyone's favorite.
>> Everybody loves Twitter.
>> Yeah.
>> And I think Twitter could generate some revenues with a little advertising model, just enough to prove that they could while they build up some sponsorships and branding. The problem is they haven't. What I'm concerned about is that -- I -- people will pay Twitter. People love Twitter. People rely -- I rely on Twitter. There's no pro version. There's no way to support Twitter financially even if you want to. And I just -- there's no excuse for that right now. You know, the companies have got to be beta testing their business models at the same time as they're beta testing their technology. And the companies that aren't doing that right now, I really worry about as we go into a really tough economic period.
>> Have you had any chats with the Twitter folks about their business model moving forward?
>> Not since the turn -- the down turn, no.
>> Yeah, that'd be interesting to know what they have planned.
>> Yeah, it would. I would like to see something very soon. And now's a little late to get this stuff started. I would have liked to seen that a little while ago.
>> Now one of the companies on your list that made me really sad was Pandora. I love Pandora. I use it every day.
>> Yeah, you and a lot of people really rely on Pandora to kind of stoke the fire of music for them. Pandora's a great company, very popular. They -- their future is dependent on their ongoing relationship with the music industry, what I call the music industrial complex. And if they don't strike a deal -- and it looks like they will, but if they don't, that's a huge exposure.
>> Right.
>> One little, you know, deal could make the company unviable.
>> Absolutely. And some other big names on the list.
>> Sure, yeah.
>> We've got Skype. I noticed that was one of them.
>> Well, Skype is really interesting. Now, Skype is, obviously, you know a lot of people rely on it. A lot of people use it. But eBay acquired Skype for a lot of money. I think it was in '05, but has not really been able to leverage that asset. So in a tough time, if -- and eBay just laid people off. They're obviously trying to figure out how to get through these things here. So eBay -- might make sense for eBay to offload Skype. The problem is the valuation of it right now, who would pick it up? And Skype is not cheap to maintain.
>> Yeah. I can imagine.
>> So I'm -- I worry about the future of Skype. I honestly don't think it's gonna fold, but this is a company that is running a little high on the hog right now, a product that's running high on the hog, and I don't know how to maneuver it out. I don't know how it maneuvers out. Of course, if I did, I wouldn't be a journalist, but I don't know how to maneuver a company like that out of a position that is kind of above its station.
>> Are we seeing any trends? Like, any one whole sector of online startups that could just kind of implode because people aren't spending the money. People aren't -- they don't have that disposable income anymore, perhaps.
>> Well, a lot of online companies are dependent on advertising. And some are dependent advertising in particular sectors that are going to be extremely hard hit. And that would be finance, travel, and real estate.
>> Ah, yeah.
>> So if you look at companies whose advertising base are primarily in those camps, then you have trouble. And those are some companies that are in the travel industry. Tripit, for example, another company we love, which we haven't really seen the revenue model pick of on. And they might be making some money right now, but if they're based on travel, and travel -- if business travel takes a hit and vacation travel takes a hit, they take hit.
>> Sure.
>> Zillo, a real estate company. Advertising based.
>> It's one of the early ones.
>> They're advertisers are real estate and finance.
>> Yeah.
>> You know, so again -- now, a lot of these companies have money in the bank, and they can maybe get through a year or two, but if this is an ongoing long-term down turn, they've got to find a way to make money on segments of the economy -- the entire segments of the economy which are pulling back.
>> Mm-hmm.
>> So hence, my list of 11 companies that have tough times ahead. And I really want them to make it.
>> Yes.
>> And all their users do. And we'll pay them if we can.
>> Absolutely.
>> Let's just figure out a way to help them through.
>> Yeah, let's just hope there aren't, like, checkboxes next to these companies. We just check them off as they fall.
>> Yeah.
>> Let's hope that's not the case.
>> Let's hope, yeah.
>> All right, thank you so much.
>> Pleasure being here.
>> CNET News Webware.com editor, Rafe Needleman. I'm CNET's Kara Tsuboi. We'll see you on the next Daily Debrief.
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